Consultants - what are your payment terms?

Amanda65

Hi all

After being made redundant, OH has taken the plunge and started up his own consultancy helping SME's cut costs and increase productivity (this is what he was doing when employed, working on a Government programme that has been shelved).

He worked for his first client :j and invoiced them immediately after completion with 'Strictly 30 days' payment terms included but we are now on day 31 with no payment . Now I know that many businesses don't pay until the last minute, and often not until a red bill is received but I am now thinking maybe as a one-man band his payment terms should be 14 days so at least if they're late we get the money within the month. OH thinks this is a little harsh so I just wondered what other payment terms consultants used?

Thanks

paddyrg

Honestly, you take what you can get. My standard terms are 7 days, knowing full well I'll be lucky to see the money within 6 weeks - but it gives me more time of being able to hassle them for being 'over a month overdue now'... And 30d is a lovely idea, but some clients insist on their own terms if you want their business. Nokia are 45d (after invoice, which comes after a delay usually getting a purchase order number to raise the invoice against), Boots can be upto 105d (I think their terms are 90d after the middle of the month of invoicing, so it could be upto 105 if you time it wrong). Some companies insist on a x% discount if they pay you on time (where 'on time' means 60 day terms). Day 31 is nothing, expect worse.

Amanda65

Thanks Paddy. He is only dealing with SME's (Small to Medium sized Enterprises) so won't have to deal with the terms (hopefully) of the big boys and their purchasing power. Will change the next contract to 14 days and see what happens

mizzbiz

With new businesses, I always take pro-forma of 50% without even starting. My terms are 7 days thereafter.

Seems to work fine - few don't take me on because of the pro-forma. If they refuse, then I don't need their business - always a sign something is not quite right.

I have negotiated on this in the past as sometimes small companies are wary of paying anything upfront without definite return but I still always expect at least a small 'deposit'.